When it comes to the law and betting on the Vikings, the problems go beyond the frigid winter air later in the season. Start with tribal exclusivity. So far, the exclusivity has kept racetracks unhappy. And this year, another element has kept the tables turning the wrong way: charities.
So whatever optimism that may have gathered prior to the start of legislative sessions this year, has been squeezed out of the discussions.
Last year, the Minnesota Indian Gaming Association (MIGA) came up with a plan to share sports wagering revenue in exchange for the exclusivity.
Alas, a proposed cap and limitations on how the revenue could be used destroyed the deal. But 2023 ended with hope for 2024, That hope flew away at the outset of negotiations.
“I said I hoped we could work something out during the interim,” Canterbury Park CEO Randy Sampson told PlayUSA. “That hasn’t happened. I did meet with MIGA, and my perspective was that we haven’t made any progress toward a meaningful solution for the racing industry. In fact, we’re going in the opposite direction.”
Andy Platto, executive director of MIGA, released the following statement, according to KARE-11:
“MIGA supports state efforts to authorize sports wagering both at tribal gaming properties and through online/mobile platforms. Tribes are best positioned to provide this new offering to the state’s consumers. MIGA and its members will be closely following the progress of state legislation and look forward to working with other stakeholders to develop an approach that benefits Minnesotans while protecting the Indian gaming operations that tribal and rural communities rely on for jobs and economic health.”
The legislative framework for sports betting from Senator Matt Klein (SF 1949) and Rep. Zack Stephenson (HF 2000) carried over to 2024 but did little else.
Meantime, local charities complained about legislative alterations to electronic pull-tabs and their impact on revenue. To offset the grumbling, lawmakers added charities to the mix.
“Certainly, we need to figure out a path where we can get both the tribes and tracks to come to an agreement as well. But the biggest change and most difficult obstacle right now is how we involve the charities,” said Senator Jeremy Miller.
The horse racing tracks put an idea on the table to support sports betting exclusivity: historical horse racing (HHR) machines. Canterbury Park and Running Aces put in a joint request to the Minnesota Racing Commission seeking authorization.
The tracks said such games come under pari-mutuel wagering voters approved in the past. The commission expects to hold a hearing March 5.
“We recognize that the opportunity for us to meaningfully participate in sports betting is very limited based on the current bills out there, so we believe that we need to pursue what options are available to us to enhance the horse racing industry,” Sampson told PlayUSA. “Historical horse racing is the most logical option because it’s a pari-mutuel product that has been successful in other states.”
The Shakopee Mdewakanton Sioux Community, the state’s most powerful tribe, sent the commission a letter nixing the deal as unconstitutional. Minnesota tribes also have exclusivity over offering video games of chance, which falls in the vicinity of HHR games.
Running Aces CEO Taro Ito came back with an older variation of the races, rather than those played in Kentucky.
“Tribes have exclusive rights to play electronic video games and blackjack, but nowhere does it say they have exclusive rights where no one can play anything else,” Ito told PlayUSA.
Last year, the tribes offered the tracks 30 percent of the state’s 10 percent tax revenue on online sports betting, capped at $3 million after the first $20 million.
That offer is no longer on the table. Minnesota’s smaller tribes backed off, concerned they would make less from sports betting than the tracks.
“I think smaller tribes did the math and said, wait a minute, tracks are going to make more than us and that’s not acceptable, so that’s why that deal got scuddled,” Ito said. “Legislators think they’ll give out 11 licenses and everyone will make money, but that’s wrong. Because everyone knows that Mystic Lake [owned by SMSC] is going to make 80-to-90 percent of the online sports betting revenue. Treasure Island will make a bit, and Grand Casino up north might make a bit. Smaller tribes partnered with Joe Schmoe sportsbook aren’t going to make any money.”
The HHR push has ended talk about sports betting.
Miller proposes giving tribes exclusivity but also permitting them to partner with tracks and pro teams to offer in-person wagering at their facilities. Tribes and tracks also have previously discussed the possibility of approving craps and roulette. Again, too many tribes registered complaints.
Miller’s bill would tax digital sports betting at 15 percent of adjusted gross revenue and allow for up to 11 operator licenses for online sports betting and up to 11 platform provider licenses, according to SportsHandle. Each tribe would be allowed to have one skin, or digital partner.
In addition, tribal casinos would be allowed to have brick-and-mortar sportsbooks, but the bill also allows for in-person wagering “on the physical premises of a racetrack or sports facility” or a qualified property located within half a mile of the track or sports venue.
“My preference would be to give the tribes a license, as well as the tracks, the [professional] teams, and even the charities,” Miller told KARE. “The reality is, the votes aren’t there in the legislature right now to make that happen, so instead of focusing or complaining on what’s not possible, with the 2.0 proposal I really wanted to focus on what is possible.”
Miller’s bill also includes what has become fairly standard advertising language, banning any advertising that targets minors or those on gambling exclusion lists and the use of the phrase “risk-free.” It would require that a problem gambling hotline number be prominently displayed in all advertising.
Ito said there are deals tracks would make with tribes.
“There are combinations of all of these that work. It’s just a matter of sitting down and seeing what we can agree to. But Klein’s amendment told us exactly what we could spend the money on. We had to spend it on purses and infrastructure like barns and stables. I don’t think that is fair. No one is telling the tribes how to use the money they’ll be getting from sports betting. Why is it that they can tell racetracks exactly what we can use it for? They can say we can’t use the money to compete against tribal casinos. That makes sense. Other than that, why can’t we take it to the bottom line or use to improve the roads to our facilities?”
Last session, language entered the discussions that restricted the pull tabs, so they do not mimic slot machines. Results of the e-pull tabs are predetermined, similar to a physical lottery pull tab. However, visuals are just for entertainment. But the SMSC thought otherwise and successfully sued the Minnesota Gambling Control Board over the visuals.
Charitable gaming takes place at bars and restaurants in Minnesota. A small portion of the revenue goes to support local veterans organizations, youth sports, volunteer fire departments and organizations that provide services for people with disabilities.
In his sports betting legislation, SF 3803, Miller pulls back some of these charitable gaming changes to ensure that the state’s charities don’t lose money. Miller’s bill went to the Senate State and Local Government and Veterans Committee.
“After hearing from many charities, I felt it was important that if we’re going to do something with sports betting, for which I’m a strong advocate, we need to revisit some of those changes we made last year. My intent and hope with this proposal is to get that discussion started,” he told PlayUSA.
“I’ve always considered them a stakeholder, but I think with what happened last year with electronic pull tab changes, they are more of a stakeholder than in the past. I would consider them a major stakeholder when it comes to sports betting legislation this year.”
Miller had positive discussions with Klein and Stephenson about including charities in the mix.
Stephenson was not as optimistic.
“My bill is focused on sports betting,” Stephenson said. “That’s what the bill does. It doesn’t bring in other unrelated topics at this point. … I really appreciate Miller starting the conversation by bringing an idea forward and I’ve been talking with him. I’ll continue to talk with him. We’re going to work together to try to find something that’s broadly acceptable, which is always my goal with legislation.”
Sampson acknowledged to PlayUSA that adding the charities to the mix made it a problem.
“Figuring out how to support an additional stakeholder will make passage of the bill a little more complicated. But charities have always been an important part of Minnesota’s gaming industry. I think the charities, tribes and tracks all have a stake in this and the sports betting legislation should be something we all can support.”
While the Dems control both chambers and the Governorship, lawmakers seek to get the bill passed this session rather than risk legislative control.
At the end of last session, House Speaker Rep. Melissa Hortman and Senate Majority Leader Kari Dziedzic spoke of sports betting as an issue left undone that will be a priority this year.
However, a cancer recurrence forced Dziedzic to step down as majority leader. Senator Erin Murphy takes over as majority leader, and it’s unclear where she stands on sports betting.
Rep. Pat Garofalo, sports wagering’s most long-standing champion in the Minnesota legislature, told PlayUSA that sports betting is on the legislative agenda, but it’s not among the top priorities. And the legislative will to do sports betting still depends on the stakeholders agreeing.
“It’s something being considered, but is it a key priority that needs to get done before adjournment? I’m not hearing that. And this is my last term, as I’m not running for re-election, so no one wants to get sports betting done more than me.”
